2015 creb forecast report

8/9/2019 2015 Creb Forecast Report

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2015 CREB. All rights reserved.

The forecasts included in this document are based on information available as of December 2014.

Prepared by Ann-Marie Lurie, CREB chief economist.

300 Manning Road NE

Calgary, Alberta

T2E 8K4, Canada

Phone: 403-263-0530

Fax: 403-218-3688

Email: [email protected]

creb.com

crebforecast.com

crebnow.com


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CONTENTS

CALGARY REGION RESALE HOUSING MARKET SUMMARY . . . . . . . . . . . .4

GLOBAL AND NATIONAL ECONOMY AT A GLANCE . . . . . . . . . . . . . . . . . . . 5

CALGARY / ALBERTA ECONOMIC FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . .6 Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Economic Growth / Employment / Wages . . . . . . . . . . . . . . . . . . . . . . . . . 8

Population Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

New Home Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Rental Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Economic Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

HOUSING MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

City of Calgary, Total Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 City of Calgary, Detached . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

City of Calgary, Apartment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

City of Calgary, Attached . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

CITY OF CALGARY DISTRICT STATS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

REGIONAL ACTIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 City of Airdrie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Region of Foothills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Region of Rockyview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

HOUSING RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

FORECAST TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

CREB2015 ECONOMIC OUTLOOK & REGIONAL MARKET FORECAST 3


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>>Calgarys regional housing market

in 2014 benefited from strong demand

due to positive economic fundamentals.

In 2015, however, several factors are

pointing toward a pullback. While overall

employment levels are forecasted to

remain steady, a drop in net migration,

coupled with expected lending rate

increases and energy sector uncertainty

will impact housing demand. While,

supply levels are expected to rise.

Given previously tight market conditions,

rising supply will simply push the market

toward more balanced conditions,

supporting price stability.

CALGARY REGION RESALEHOUSING MARKET SUMMARY

Calgary 81.4%

Rockyview 6.2%

Other active areas 2.3%

Air rie 5.4%

Foot i s region 4.7%

are o ota a es

trat moretrat more

ulcanulcan

DidsburyDidsbury

CarstairsCarstairs

ac eac e

oto soto s

HighHighverver

ageageererPointePointe

CayleyCayley

acacamonamon

rnerrneralleyalley

e se ere se er

ereererrestest

ononggLanLan

rr canarr cana

CochraneCochrane

ragg reeragg ree

RedwoodRedwoodMeadowsMeadows

remonaremona

MOUNTAIN VIEWMOUNTAIN VIEW

ALGARYALGARY

AIRDRIEAIRDRIE

NOTE: CREBs economic region,

which is defined by members activity,

consists of Calgary, Airdrie, Rocky View

County, M.D of Foothills and Other,

which includes Strathmore, Vulcan,

Carstairs, Didsbury and Cremona. The

following distribution chart indicates the

share of total sales activity by region.

CREB2015 ECONOMIC OUT LOOK & REGIONAL MARKET FORECAST4


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The global economy underperformed

in 2014, mostly due to weaker than

expected growth in the United States,

Europe and China. Its expected to

improve in 2015 due to the accelerated

pace of growth in the U.S. economy.

Europes fragile economy continues

to be at risk due to lingering issues

with labour markets, persistently low

inflation and elevated risk. Modest

growth is expected in 2015 based on

the combined effects of rising world

demand, policy changes and structural

reforms within the region.

According to the Bank of Canada,

emerging market growth varies

significantly by location. Areas

such as India and Indonesia are

benefiting from successful political

transitions, while structural reforms

in Mexico are fostering growth.

Brazil, Russia and Turkey, however,

are experiencing weaker growth as

a result of political or geopolitical

tensions. While market divergence

will persist, economic growth in

the U.S. will strengthen emerging

markets through to 2016.

Chinas economy stumbled out of

the gates in 2014, but recorded gains

over the next three quarters followingimprovements to net exports. The Bank

of Canada expects growth to ease from

7.4 per cent in 2014 to seven per cent

in 2015.

NOTE: U.S. ECONOMY

Despite a weak start to 2014, the U.S.

economy gained speed throughout

the remainder of the year. Strong

employment gains supported rising

demand and, ultimately, business

investment growth. Positive momentum

in the labour market is expected to

support eventual income gains and

stronger growth in both consumer

spending and housing demand. Many

economists anticipate the countrys GDP

will grow by more than three per cent

in 2015, supporting a stronger globaleconomy.

NOTE: CANADIAN ECONOMY

For many economists, Canadas economy

fell short of expectations in 2014 as the

business sector hesitated to increase

investments, governments were in fiscal-

restraint mode and weak labour income

growth eroded households purchasing

power. Moving forward, stronger U.S.

economic growth, coupled with a weaker

Canadian dollar, is expected to boost

Canadian exports, making it the primary

driver of growth in 2015. This should

help motivate business investment

and support growth in both full-timeemployment and wages. However, lower

crude oil prices are expected to change

the dynamic of growth in the country.

The outlook has improved for most non-

resource based economies, yet declined

for resource-rich provinces.

GLOBAL AND NATIONAL ECONOMYAT A GLANCE

Real Annual GDP Growth

2.5%

2.3%

1.7%

2.4%

2.6%

2.1%

1.9%

2.3%

3.0%

1.4%

2.3%

2.3%

3.8%

1.2%

1.7%

2.3%

1.8%

9.0%

1.6%

2.0%

1.5%

2.4%

British Columbia

Alberta

Saskatchewan

Manitoba

Ontario

Quebec

New Brunswick

Nova Scotia

Newfoundland and

Labrador

Price Edward Island

Canada

Source: Provincial Economic Forecast, TD Economics December, 2014

2014 (F)

2015 (F)



6/28

ENERGY

>>The energy sector continues to be a key

driver of Albertas economy. Investment

spending and economic activity in the

industry have generated employment

growth both in and out of the oil patch, as

well as encouraged healthy net migration

gains in the province.

In the later portion of 2014, however,

global crude oil prices fell by more

than 40 per cent, raising concerns of

potential fallout for Albertas economy.

Slower economic growth in countries

such as China and the U.S. weakened

global oil demand that, when coupled

with increased supply from Libya and

U.S. shale oil products, contributed to

a surplus of oil and placed downward

pressure on prices.

The price decline was precipitated by

OPECs announcement that it would not be

cutting production. While some analysts

indicated most OPEC members preferred

to keep energy prices above current levels,

they were also willing to allow prices to

fall in order to retain OPECs market share

in the U.S. by curtailing expansion plans by

shale oil producers.

In Alberta, the impact of global crude oil

price volatility was somewhat cushionedby both a weak Canadian dollar and a

narrower differential between industry

benchmark West Texas Intermediate

(WTI) and Western Canadian Select

(WCS). The narrowing was a result

of strong heavy oil refinery demand,

pipeline expansions and increased rail-

delivered export capacity. This placed

Alberta oil producers in a favorable

situation prior to price declines.

Moving forward, the fall in prices will

encourage some producers to reduce

costs and delay expansion plans.

While oil production will moderate

as a result, some analysts indicate

production will likely remain positive

as operating costs remain above

current prices.

CALGARY / ALBERTAECONOMIC FACTORS

40

60

80

100

120

140

US $ / BBL

Brent Crude Oil Price WTI Crude Oil Price Western Canadian Select

Source: Al erta Oil San s BVM, PEMEX, Statistics Cana a

ru e r ce

Jan05

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

0

Crude Oil Price Spread WTI to WCS

WCS/WTI spread Annual average spreadSource:Alberta Oil Sands BVM, PEMEX

US $ / BBL

5

10

15

20

25

30

35

40

45

Jan05

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14



7/28

Investment Spending Alberta

40

50

60

70

80

90

100

110

120

Source: Alberta Government, adapted from Statistics Canada Cansim Table 029-005

$ Billions

04 05 06 07 08 09 10 11 12 13 14(E)

ENERGY (CONT.)

Given the perceived excess world

supply, WTI oil prices are expected to

average $62 US per barrel in 2015. As

world economies improve, demand will

increase, helping to reduce excess supply

levels by the end of 2015. Some analysts

anticipate medium-term prices to average

$75 to $80 per barrel.

Energy price volatility and subsequent

swings in the economy are common.

Despite historic price fluctuations,

Alberta continues to be one of Canadas

most prosperous provinces. Only a

prolonged period of lower price levels

would impact future investment and, in

turn, affect job growth and net migration.

Oils impact on the housing market over

the next two years will depend on the

degree of pullback within the energy

sector. To compare, energy investment

in 2009 slowed substantially after the

financial crisis, slower global growth and

the U.S. recession. An estimated 16,318

full-time jobs were lost in the Calgary

Census Metropolitan Area (CMA) in 2009

and another 4,281 in 2010.

The financial crisis had a significant

impact on both housing sales activity and

pricing in Calgary. However, the impactfollowing the energy sector pullback was

less severe. While sales activity dropped

to 10-year lows in 2010 following two

consecutive years of jobs losses, listings

also fell, which prevented any further

price weakening.

The scenario in 2015 is far different. The

U.S. economy is far stronger following

years of deleveraging, as both consumers

and businesses have been repairing

their balance sheets. With consumer

spending gaining traction and business

investment improving, economic

growth is expected to pick up in the

U.S. to growth levels not recorded since

2005. That growth, when combined

with a depreciating Canadian dollar,

should help support the export sector.

Furthermore, rising U.S. demand will

also help support demand growth for oil.

Nonetheless, Albertas energy sector

will likely face a challenging year, whichwill impact the housing market. Lower

energy prices will slow the provinces

economic growth. Analysts expect

a reduction in investment spending,

government revenues, corporate profits

and, ultimately, household income.

While forecasts point to some pullback

in energy related employment, gains in

the services and construction sector are

expected to offset the losses, resulting in

stable employment levels in the

Calgary CMA.

Concerns regarding the energy sector,

along with slowing migration levels and

employment growth, are expected to

cause a pullback in housing demand in

2015, but not to the levels seen in 2010.

Meanwhile, despite a decline in sales,

prices are expected to remain relatively

stable as supply levels in the housing

market are lower than levels seen during

the previous energy sector pullback.

The biggest risk to Albertas energy

sector over the medium to long term

will be market access. The province will

need to be able to enter non-traditional

markets in order to reduce business risk

and support further investment growth.

Further delays for pipeline development

will ultimately weigh on long-term

economic growth, both in the province

and the country.




8/28

ECONOMIC GROWTH /EMPLOYMENT / WAGES

>>GDP growth in the Calgary area is

expected to grow by 4.5 per cent in 2014

and 1.5 per cent in 2015, according to

the Conference Board of Canada. While

weaker than originally forecasted, a

recession is not expected unlike in 2009

when Calgarys economy retracted by

nearly four per cent.

Over the past two years, Calgarys

economy has been fueled by the strong-

performing construction and energy

sectors. While future demand for Alberta

oil will likely be weaker than previously

forecasted, it is expected to remain robust

enough to support stability in the primary

and utilities industries, which represents

nearly 32 per cent of the GDP share.

Ongoing residential and non-residential

projects, meanwhile, are likely to support

further gains in the regions construction

sector in 2015. In addition, previous gains

in employment, wages and population

will generate growth in the service sector.


GDP Growth by Industry

Source: Statistics Canada,

Conference Board of Canada Forecast

2014(F) 2015(F)

Public Administration

Arts, Entertainment and RecreationAccommodation and Food ServicesOther Services (except Public Administration)

Professional, Scientific and Technical ServicesManagement of Companies and EnterprisesAdministrative and Support,Waste Management and Remediation Services

Finance and InsuranceReal Estate and Rental and Leasing

Information and Cultural Industries

Educational servicesHealth care and social assistance

Transportation and Warehousing

Wholesale TradeRetail Trade

Construction

Agriculture, Forestry, Fishing andHunting; Mining, Quarrying, and Oiland Gas Extraction; Utilities

Manufacturing

-2.94%

0.98%

1.85

2.76%

2.26%

2.22%

4.06%

1.79%

4.24%

2.61%

0.76%

1.01%

7.80%

1.50%

5.57%

2.43%

2.72%

0.20%

6.36%

2.51%

5.63%

0.25%



9/28

2014(F)

Share of Total GDP by Industry

31.65%

8.98%

5.79%7.88%

4.55%2.92%

15.23%

9.61%

6.95%

3.78%2.65%

0%

5%

10%

15%

20%

25%

30%

35%

Source: Statistics Canada, Conference Board of Canada Forecas

ECONOMIC GROWTH /EMPLOYMENT / WAGES(CONT.)

An estimated 21,300 jobs were created

in the Calgary CMA in 2014, of which

nearly 60 per cent of the positions were

full-time. While the pace of full-time job

growth has eased since 2012, more than

60,000 positions have been created over

the past three years, helping to support

housing sector activity.

New and ongoing commercial and

residential projects in the Calgary CMA,

supported healthy employment gains in

the construction and wholesale/retail

trade industries in 2014.

Earnings in the province have also been

improving, as nearly every industry

recorded gains in 2014. Overall wage

gains helped offset rising home prices

in 2014, keeping housing in Calgary

relatively affordable.


Employment Growth by Industry Annual

8,730

3,577

9,402

4,620

-1,319

-1,562

1,474

-1,233

-1,854

5,033

3,985

536

1,250

1,143

1,645

265

-3,923

4,323

-1,455

-319

-389

-2,496

Source: Statistics Canada, Conference Board of Canada Forecas

2014(F) 2015(F)



10/28

ECONOMIC GROWTH /EMPLOYMENT / WAGES(CONT.)

Moving into 2015, employment levels are

expected to increase by 0.90 per cent.

Job losses are expected in the primary

and utilities sector, which includes the

mining, quarry and oil and gas extraction

(highest earnings sector). Meanwhile, the

personal and non-commercial services

industries are expected to see the largest

growths in employment.

Population gains in the Calgary CMA

will generate new job opportunities

in areas such as accommodation, food

services, recreation, education and

health services. However, some of these

positions represent the lower ranges of

the provincial weekly earnings.

Overall, Calgary wages will improve,

says the Conference Board of Canada.

However, the pace of growth will ease,

which, when combined with slower

employment growth, will not only

dampen housing demand, but also

influence migration decisions. With

less high-paying jobs being created and

economic conditions improving in other

parts of the country, local companies

will have a more diffi cult time attractingmigrants to the area.

Alberta Average Weekly Earnings by Industry

-5%

0%

5%

10%

15%

20%

25%

$0

$500

$1,000

$1,500

$2,000

$2,500

Industria

laggregateexcludingunclassified

Goodsproducingindustries

Forestry,loggingandsupport

Mining,quarrying,andoilandgasextraction

Utilities

Construction

Manufacturing

Serviceproducingindustries

Trade

Transportationandwarehousing

Informationandculturalindustries

Financeandinsurance

Realestateandrentalandleasing

Professional,scientificandtechnicalservices

Managem

entofcompaniesandenterprises

Administrative

andsupport,wastemanagement

Educationalservices

Healthcareandsocialassistance

Arts,entertainmentandrecreation

A

ccommodationandfoodservices

Otherservices(exceptpublicadministration)

Publicadministration

Oct. 2014

y/y % gain

Source: Statistics Canada, CANSIM table 281-0063, last modified: 2014-12-22

Calgary CMA Employment Growth

Y/Y % Change Average Annual Employed

Source: Seasonally adjusted data, Statistics Canada,Conference Board of Canada Forecast

% change (y/y) Total employment

FORECAST

030201 04 05 06 07 08 09 10 11 12 13 14 15 16

2.97%

3.72%

2.90% 2.75%

0.90%

1.90%

500,000

550,000

600,000

650,000

700,000

750,000

800,000

850,000

900,000

-2%

0%

2%

4%

6%

8%

10%




11/28

POPULATION GROWTH

>>Calgarys housing market benefited

from a second consecutive year of record

net migration levels in 2013 thanks to

strong employment gains and favorable

economic conditions in the region

relative to other parts of the country.

The Calgary CMAs population grew by

4.36 per cent in 2013, compared with

three per cent provincewide, according

to the Conference Board of Canada. An

estimated 45,000 migrants moved into

the Calgary CMA in 2013.

NOTE: Migrants tend to be younger.

Compared to the rest of Canada, Alberta

has the largest share of working-age

population and the lowest share of

seniors. In Calgary, 35 per cent of the

population is 25 to 44 years old,

according to the latest civic census. This

age cohort represents a demographic that

is most likely in the homebuying phase of

their life.

Net migration growth has served as

a catalyst to the housing sector

both for new, resale and rental

accommodations. Strong net migration

resulted in housing demand growth

that far exceeded expectations over

the past two years.

Calgary migration levels are forecasted

to ease over the next several years as

weaker economic conditions inside

the province limit opportunities and

incentives for people to move here.

Overall levels, however, are generally

expected to remain above 22,000 in 2014

dropping to just over 15,000 in 2015.

While the pullback seems significant

following record numbers, migration

levels should continue to support

housing demand, albeit at lower levels,

which are more consistent with long-

term averages.

FORECAST

Calgary CMA Net Migration

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Source: Statistics Canada, Conference Board of Canada adjustment

Conference Board of Canada Forecas




12/28

NEW HOME SECTOR

>>Calgary CMA housing starts are

estimated to increase by 39 per cent

to 17,533 units in 2014, relative to the

previous year. Over the first 11 months of

2014, single-detached sales increased by

1.3 per cent to 6,067 units. Meanwhile,

multi-family starts nearly doubled,

reaching 10,224 units. The overall rise in

starts increased the amount of product

under construction. Yet, two consecutive

record years of net migration combined

with positive employment opportunities

and low mortgage rates depleted

inventory levels in both the resale and

new home sectors.

The new and resale housing markets

have a close relationship. During the last

economic downturn, housing supply

increased, resale market conditions

favoured the buyer and starts activity

fell. As the economy improved, housing

demand rebounded, resale stock was

depleted and housing starts activity rose.

FORECAST

Calgary CMA Housing Starts

0

2,000

4,000

6,000

8,000

10,000

12,000

Source: CMHC, Conference Board of Canada Forecast

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Single-family Multi-family

Calgary CMA Newly Completed and Unoccupied

Source: CMHC

Jan05

Jan04

Jan03

Jan02

Jan01

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14


0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Calgary CMA Under Construction

Source: CMHC

Jan05

Jan04

Jan03

Jan02

Jan01

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000




13/28

Calgary CMA Rental Market

0

200

400

600

800

1,000

1,200

1,400

1,600

0%

1%

2%

3%

4%

5%

6%

Vacancy rates, row and apartment 3 units and over - Calgary

Calgary average rent apartment 3 units and over - 2 bedroom Source: CMHC, CMHC Forecast

FORECAST

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

NEW HOME SECTOR (CONT.)

Heading into 2015, overall new home

inventory continues to remain below

historical norms even with an increase

in starts activity and product under

construction. Within the sector, single-

family product under construction

remains well below historical norms,

while multi-family product is near all-

time highs. As most of the product is

pre-sold, absorption rates should remain

strong. While a pullback in demand could

push up inventory levels particularly in

the multi-family market a large amount

of product would need to be unabsorbed

to substantially add to the non-existent

inventory. That said, a greater-than-

expected increase in multi-family

inventories would moderate any price

appreciation for resale condominium

apartments.

Despite some sector risk, overall

household formation figures indicate

there is minimal risk of oversupply.

Prior to the economic downturn in

2009, starts activity in the Calgary area

were occurring at a rate that exceeded

estimates of household formation. When

the recession occurred, falling demand,

combined with overbuilding, resulted

in excess supply in the entire housing

market and price corrections. Starts levelsslowed to help balance the market.

While construction levels have recently

increased, figures are more in line with

household formations, indicating a

different risk profile today relative to

pre-recessionary figures. Furthermore,

overall starts levels are expected to slow

in 2015 due to a pullback in the multi-

family sector.

RENTAL MARKET

>>Tight rental market conditions

supported increased demand for housing

in the city in 2014. Lack of rental options,

rising rents and low lending rates

encouraged both first-time homebuyers

and investors to enter the market, notably

in the condominium apartment sector.

According to Calgary Mortgage Housing

Corporations (CMHC) October 2014

rental survey, Calgarys condominium

apartment rental sector increased to

52,981 units from the 49,204 recorded in

2013. Meanwhile, the secondary rental

market for condominium apartments

recorded just a 1.1 per cent vacancy rate,

with monthly rents for a two-bedroom

unit increasing to $1,511 from $1,400

in 2014.

Moving forward, increased supply from

both purpose-built and the secondary

condominium apartment rentals,

combined with an expected drop in

migration, should help increase vacancy

rates, which are still expected to stay

below two per cent in 2015.




14/28


INTEREST RATES

>>With the labour market improving and

inflation expected to reach target levels,

the Bank of Canada is expected to begin

raising interest rates in the later portion

of 2015. While the increases are expected

to be gradual and modest, this should

place some downward pressure on the

relatively strong levels of price growth.

NOTE: WHAT IS A

NORMAL INTEREST RATE?

The Bank of Canada has set rates well

below their estimated neutral level. A

neutral or normal level is considered a

long-run rate consistent with economic

growth that corresponds with full

employment and stable inflation,

assuming no shocks to the system. The

decision to keep rates lower than the

neutral level (or stimulative monetary

policy) was intended to encourage

consumption. While forecasters are

expecting rates to increase over the next

five years beginning in 2015, the question

is what will the new normal level be?

While estimates vary regarding where the

long-term neutral level will end up, most

analysts anticipate the new levels will

remain below the levels recorded prior

to the economic downturn in 2009.

ECONOMIC RISK

Albertas economy is closely tied to

the energy sector. Further declines in

oil prices will push companies to look

for cost savings which can include not

only a pull back in investment, but job

losses. If prices do not show signs ofimprovement by the end of the year

then the impact can be greater than

expected.

Concerns in the energy sector can

significantly weaken consumer

confidence which could cause a pull

back in spending, trickling into other

sectors.

Much of Canadas economic growth

expectations are based on what happens

in the U.S. economy. If economic

conditions are stronger than expected,

Canadas export sector will benefit,

boosting the overall economy; if weaker,export growth and business investment

will be limited.

Longer-term risk continues to exist

regarding energy market access. Future

investment in the energy sector and

subsequent growth throughout the

province will largely depend on pipeline

approvals and Albertas ability to access

growing emerging markets.

Lending Rates and Price Growth

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Median price growth City of Calgary Average 5-year lending rate

Source: CREB,

Conference Board of Canada

Jan05

Jan04

Jan03

Jan02

Jan01

Jan00

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14



15/28

Calgary Inventory and Sales to New Listings Ratio

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Inventory trend Sales to new listings ratio trend Source: CREB12 month moving average

Jan05

Jan04

Jan03

Jan02

Jan01

Jan00

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

Calgary Sales and Listings Growth

-60%

-40%

-20%

0%

20%

40%

60%

80%

New listings growth y/y trend Sales growth y/y trendSource: CREB

12 month moving average

Jan05Jan04Jan03Jan02Jan01 Jan06 Jan07 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14

HOUSINGMARKET

CITY OF CALGARYTOTAL MARKET

>>Calgarys resale housing market

enjoyed a robust year in 2014. Housing

demand growth was fueled by several

factors, including employment and net

migration growth, low lending rates and

tight rental markets. All of these factors

cumulated into 9.4 per cent growth in

sales activity to 25,545 units relative to

the previous year, and nearly 15 per cent

above the 10-year average for the city.

While economic fundamentals supported

sales growth, the dynamics of the market

varied as the year progressed. First-

quarter sales growth compared to the

same period in 2013 far exceeded the pace

of growth in new listings, causing further

declines in inventory levels and creating

strong market conditions for sellers. This

resulted in steep unadjusted price gains

that encouraged new listings. However,

it was not until end of the second quarter

that listings grew at a rate fast enough to

result in inventory gains.



16/28


17/28

Calgary Annual New Listings Share by Price Range, Detached

Source: CREB

>While detached sales represent the

majority of resale housing transactions

in Calgary at 59 per cent and have

surpassed long-term sales trends it

continues to lose market share to the

more affordable apartment and attached

sectors, which posted record sales levels

in 2014.

The detached sector also continues to

undergo a notable shift in activity by

price range. In 2014, less than 20 per cent

of detached new listings were priced

below $400,000, compared to 40 per

cent in 2011. While inflationary pressures

typically result in the general shift of

activity in the price ranges, it is the speed

of adjustment that is noteworthy.

Unless market conditions significantly

change, or there is a surge of new product

available in lower price ranges, Calgary

will continue to see less detached product

available in the lower price ranges.

For buyers, this will limit their options

and possibly push them to consider

alternative product types and locations.



18/28

Calgary Annual Sales and Price Growth Forecast, Detached

Source: CREBDetached Price growth10 yr average

-10%

0%

10%

20%

30%

40%

50%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

04 05 06 07 08 09 10 11 12 13 14 15

FORECAST

Calgary Months of Supply and Price Changes, Detached

0.00

1.00

2.00

3.00

4.00

5.00

6.00

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Jan05

Jan04

Jan03

Jan02

Jan01

Jan00

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

Benchmark y/y price change Months of supply trendSource: CREB

12 month moving average

HOUSINGMARKET

CITY OF CALGARYDETACHED (CONT.)

Meanwhile, unadjusted average annual

benchmark prices in Calgarys detached

sector, which had previously recorded

three consecutive years of strong gains,

increased by 10 per cent to $508,233 in

2014. Strong price gains subsequently

encouraged a 5.9 per cent increase in

listings, which outpaced sales growth (4.6

per cent) for the first time in four years.

As economic conditions weaken and

uncertainty can cause consumers to delay

plans to move up, demand for detached

products will decline at a greater rate

than the attached and apartment sectors

and inventories will increase. Yet, given

relatively tight inventory levels heading

into 2015, this will help move the sector

toward more balanced conditions and still

support price stability.



19/28

HOUSINGMARKET

CITY OF CALGARYAPARTMENT

>>Calgarys resale apartment sector

is coming off a record year, with sales

increasing by 18.4 per cent to 4,801 units.

This product, which represents nearly

19 per cent of all citywide sales, is often

a more affordable choice for potential

homeowners looking to stay within

the city limits. Of the 7,387 new listings

available in this sector in 2014, more than

3,875 (52 per cent) were priced below

$300,000.

While low mortgage rates and overall

affordability supported demand for

apartments, it was also Calgarys tight

rental market supported ownership

growth. Limited vacancies and high rents

prompted many first-time buyers and

investors to enter the apartment sector.

Calgary Sales Forecast, Apartment

Apartment 10 yr averageSource: CREB

FORECAST

04 05 06 07 08 09 10 11 12 13 14 15

0

1,000

2,000

3,000

4,000

5,000

6,000

Calgary Quarterly Share of New Listings by Price, Apartment

Source: CREB


20/28

HOUSINGMARKET

CITY OF CALGARYAPARTMENT (CONT.)

Like other segments within Calgary, the

apartment sector went from a sellers

market early in the year to a more

balanced one by the end. Apartments

were the first to move into more balanced

conditions, due to a significant increase

in new listings. While price increases

levelled off, the unadjusted benchmark

price had already matched the previous

monthly record high from August 2007

by June 2014.

In 2015, price gains are expected to

slow to one per cent due to increased

competition from the new home

sector, and as demand tapers slightly

due to expected gains in lending rates

and economic concerns. In addition,

the sector will be challenged by an

increasingly accessible rental market.

Calgary Price Forecast, Apartment

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Source: CREB

04 05 06 07 08 09 10 11 12 13 14 15

Price growth Benchmark price

FORECAST



21/28

HOUSINGMARKET

CITY OF CALGARYATTACHED

>>Attached sales increased by 16 per cent

to 5,647 units in 2014 relative to 4,869

units the year prior. The attached sector

represents 22 per cent of all the sales

within the city. While sales growth has

surpassed listings growth for most of the

past three years, the spread narrowed

in 2014, causing some improvements

in supply.

The distribution of attached product

varied across price ranges. While

the amount of sales occurring under

$300,000 was less than the apartment

sector, it still represented nearly 25

per cent of all attached listings in 2014.

Meanwhile, 38 per cent of sales occurred

in the $300,000-to-$400,000 range, while

more than 11 per cent were priced above

$700,000. What this says is that while

demand was high for affordable attached

product, consumers were also willing to

purchase higher-priced product likely

due to location given more than 85 per

cent of the those $700,000-plus sales

occurred in the city centre.

Attached benchmark prices increased

by 9.6 per cent to $348,483 in 2014. Price

gains in the sector followed a similartrend to that in the detached sector,

with stronger gains throughout the

second quarter and a leveling off by the

end of 2014.

Moving forward, sales activity in

the attached sector will likely mimic

apartments, with demand moderating

slightly due to expected gains in

lending rates and short-term economic

concerns, as well as a more accessible

rental pool. However, price growth

is expected to be slightly higher

than anticipated due to the changing

composition of attached product.

Attached Sales Share by Price Range

Source: CREB

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


22/28

CITY OF CALGARYDISTRICT STATS>>Prices and market activity vary

significantly depending on a propertys

location. The City of Calgary planning

division has mapped out various areas

of the city, representing eight different

districts. The central and west areas of

the city are the highest-priced districts

across all product types. The most

affordable are the east and northeast.

Overall sales improved in all areas, with

strongest growth in the northeast and

southeast due to strong new listings

growth the two areas accounted for

nearly 25 per cent of citywide sales

activity. The central area remained the

largest district in terms of sales activity

due to robust attached and detached

activity near downtown.

NOTE: District sales represent

approximately 99.5 per cent of citywide

sales. Citywide sales data also includes

activity in areas that are often not

categorized into a specific community.

N

NE

E

SES

CW

NW



23/28

CITY OF CALGARYDISTRICT STATS

2014 C NE N NW W S SE ETotal

City

Detached

Median Price 679,750 371,550 460,000 540,000 682,250 475,725 460,000 335,000 487,500

Y/Y % Change 12.36% 10.91% 9.52% 10.09% 10.13% 8.12% 8.24% 13.56% 7.85%

Sales 1,638 2,022 2,116 2,158 1,432 2,923 2,341 461 15,097

Sales growth -5.92% 16.95% 3.88% 1.17% -10.16% 2.06% 22.37% 9.76% 4.60%

New Listings 2,727 2,872 2,755 2,915 2,227 3,872 3,055 620 21,068

New listings growth -2.47% 20.72% 4.71% 0.69% -6.82% 4.00% 19.52% 23.02% 5.93%

Sales to new listings ratio 60.07% 70.40% 76.81% 74.03% 64.30% 75.49% 76.63% 74.35% 71.66%

Share of district sales 31.62% 71.30% 70.07% 65.63% 53.73% 64.74% 71.85% 59.41% 59.10%

Share of city wide sales 10.85% 13.39% 14.02% 14.29% 9.49% 19.36% 15.51% 3.05%

Attached

Median Price 678,250 265,000 330,000 357,500 418,000 320,000 340,000 245,000 349,900

Y/Y % Change 10.61% 11.46% 8.46% 8.91% 12.06% 10.34% 9.15% 20.99% 7.66%

Sales 1,198 660 633 668 705 928 675 180 5,647

Sales growth 5.46% 39.24% 16.36% 16.17% 16.53% 9.82% 30.56% 4.65% 15.98%

New Listings 2,101 911 804 847 911 1,103 792 248 7,717

New listings growth 10.87% 46.46% 29.26% 22.22% 20.34% 9.97% 33.56% 0.81% 19.98%




Apartment

Median Price 343,000 225,000 262,000 272,250 305,400 245,000 265,000 204,000 285,000

Y/Y % Change 9.76% 12.92% 9.17% 12.97% 9.07% 7.69% 12.05% 16.64% 9.20%

Sales 2,344 154 271 462 528 664 242 135 4,801

Sales growth 18.38% 31.62% 19.91% 23.86% 14.29% 12.54% 30.81% 9.76% 18.37%

New Listings 3,837 282 399 638 769 940 338 183 7,387





Total

Median Price 498,000 347,000 425,000 484,900 552,500 425,000 425,000 303,050 425,600

Y/Y % Change 4.84% 10.16% 8.97% 8.24% 5.44% 7.19% 8.97% 13.93% 6.40%

Sales 5,180 2,836 3,020 3,288 2,665 4,515 3,258 776 25,545

Sales growth 6.65% 22.24% 7.59% 6.72% 0.15% 5.02% 24.59% 8.53% 9.36%

New Listings 8,665 4,065 3,958 4,400 3,907 5,915 4,185 1,051 36,172






24/28

REGIONALACTIVITY

CITY OF AIRDRIE

>>Airdrie posted record sales activity

in 2014, increasing annually by nearly

28 per cent to 1,695 units. While new

listings grew by 32 per cent during the

same period, overall market conditions

were tighter in Airdrie than in Calgary. By

year end, rising supply helped ease some

market tension, yet conditions continued

to favour sellers.

When considering all product types,

benchmark prices rose at an average

annual rate of nearly 10 per cent in 2014.

While tight market conditions may

translate into further gains in 2015, an

increase in listings in both Calgary and

Airdrie should help ease some of the

price pressure.

In addition to lifestyle choices,

consumer demand for detached homes

in Airdrie will continue to be fueled by

the sectors relative affordability and

selection particularly in lower price

ranges. Relative to its total market

size, Airdrie had a larger share of

detached properties in residential resale

housing market last year than Calgary,

representing 67 per cent of new listings.

In addition, the aggregate annual

average benchmark price of a detachedhome in Airdrie was 19 per cent lower

than in Calgary.

Airdrie Annual Sales

Source: CREBDetached Apartment Attached

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

REGION OF FOOTHILLS

>>The Foothills Region is comprised of

a wide range of towns and rural areas.

Okotoks accounted for 52 per cent of the

total sales in the district in 2014, followed

by High River and other rural areas at 16

per cent each.

Sales activity in the Foothills Region

increased annually by 10.3 per cent

in 2014 to 1,468 units, reaching newrecord levels. The district benefited

from its close proximity to Calgary and

the diversity in product available to

consumers in all price ranges.

The aggregate benchmark price

for all residential properties in the

region increased by 8.66 per cent in

2014, a faster pace than the previous

year due to tighter market conditions

in Okotoks. The average annual

benchmark price for all residentialproperties in Okotoks increased

annually by 10 per cent.



25/28

REGIONALACTIVITY

ROCKYVIEW REGION

NOTE: Due to the diverse nature of

the properties within Rocky View Country,

trends in the residential resale housing

market can significantly vary from the

regional context. The region borders

Calgary on the west, north and east, and

includes municipalities such as Cochrane,

Chestermere, Irricana and Crossfield, as

well as rural properties in undefined areas

such as Springbank and Bearspaw.

>>Sales activity in the Rockyview Region

reached record levels in 2014, increasing

by 28 per cent to 1,951 units. New listings

growth just kept pace with sales during

the year, however, throughout most of

the year sales outpaced new listings

causing inventory to decline and market

conditions to tighten.

Cochranes residential resale housing

market accounted for the largest share of

sales activity in the Rockyview Region in

2014, representing 39 per cent share of

total sales, followed by the rural area and

Chestermere.

On aggregate, tight market conditions

supported further pricing gains. Yet, due

to the municipal districts geographic

diversity, those gains and prices varied

throughout the region. Cochrane andChestermere recorded respective total

residential benchmark price gains of 9.5

and 10.8 per cent in 2014 over the previous

year, compared with 8.5 per cent in the

rural portion of the region.

Aggregate prices in both Cochrane and

Chestermere continued to be higher than

other surrounding areas, such as Airdrie,

as well as certain communities within

Calgary. However, on aggregate, detached

homes in these two centres tended to

feature more square footage, larger lot

sizes and were newer than properties

within Calgary.

Overall, the Rockyview area benefits

from its close proximity to Calgary. In

addition to lifestyle preferences, many

of the surrounding towns within the

district continue to offer relatively moreaffordable options when compared with

the City of Calgary.

Rockyview Inventory and Sales to New Listings Ratio

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0

100

200

300

400

500

600

700

800

900

1000

Jan05

Jan04

Jan03

Jan02

Jan01

Jan00

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

Inventory trend Sales to new listings ratioSource: CREB

12 month moving averag

Share of 2014 Sales

Cochrane

39%

23%Chestermere

Other

15%

Rural

Rockyview

23%



26/28

FORECASTTABLE

Economic Indicators 2012 20132014

(F)

2015

(F)Forecaster

Calgary CMA GDP Growth 3.79% 3.74% 4.47% 1.46%Conference Board ofCanada

Calgary CMA Net Migration 31,996 45,168 22,945 15,280 City of Calgary

Calgary CMA EmploymentGrowth

3.72% 2.90% 2.75% 0.90%Conference Boardof Canada

Average Aptidential MortgageLending Rate 5 year

4.24% 4.17% 4.08% 4.43%Conference Boardof Canada

Housing Starts:Single Family CMA

5,961 6,402 6,642 6,489Conference Boardof Canada

Housing Starts:Multiple Family CMA

6,880 6,182 10,892 7,396Conference Boardof Canada

Apartment Rental Rates**,Calgary CMA

1,150 1,224 1,322 1,330 CMHC

Apartment Vacancy Rates**,Calgary CMA

1.30% 1.00% 1.40% 1.60% CMHC

WTI Price 94.12 97.91 93.82 62.75U.S. Energy InformationAdministration

Henry Hub Price 2.75 3.73 4.44 3.83U.S. Energy InformationAdministration

MLS Resale Market 2012 20132014

(F)

2015

(F)Forecaster

City of Calgary

Sales 21,099 23,358 25,545 24,503 CREB

Price Growth 5.13% 7.95% 9.85% 1.58% CREB

New Listings 31,656 31,992 36,172 37,370 CREB

City of Calgary Detached

Sales 13,523 14,433 15,097 14,372 CREB


City of Calgary Attached

Sales 4,025 4,869 5,647 5,435 CREB


City of Calgary Apartment

Sales 3,551 4,056 4,801 4,695 CREB


The risk lies with employment levels.

If overall employment falls and job

prospects worsen, this can result

in higher-than-expected gains in

inventories relative to sales. In this

scenario, inventories would rise, amid

weaker demand, placing downward

pressure on prices.

Concerns over the energy sector

could impact consumer confidence

in the market. If energy prices stay

low throughout the year, this can

further dampen confidence and cause

consumers to delay any unnecessary

changes regarding housing. However,

if energy prices improve sooner than

expected, this could change the outlook

in terms of employment, migration, and

ultimately housing.

A greater than expected increase in

new multi-family inventory could

result in increased supply in the resale

market, placing downward pressure on

apartment and attached prices.

HOUSINGRISK



27/28

NOTE: DATA CHANGES

CREB continues to strive to

improve data integrity. As a result, the

organization has decided to alter

reporting categories, in addition to

making further improvements to sales

and listings inclusions in its data.

The key difference is with regard to

property types. In the past, CREB has

reported on single-family, condominium

apartment and condominium townhouse

properties. Single-family product included

all properties that were freehold titled,

as well as both attached and detached

product. Detached product accounted

for 88 per cent of the single-family

activity. Meanwhile, condominium

townhouses included properties that

were condominium titled, excluding

apartment high-rise or low-rise product.

This categorization of the data, however,

did not necessarily represent the most

homogeneous property type.

Current categories have been revised to

reflect detached, attached and apartment-

style product. A detached home will be as

it states any property that is not attached

to any other property. An attached

property, meanwhile, will consist of any

property type that is attached to another

in any form without internal hallways.

Apartment product will be classified

as those that are attached to another

property via internal hallways.

In addition to category changes, CREB

will be making changes to the regions it

reports on. CREB will continue to cover

Calgary, but will also include figures for

Calgary CMA, Airdrie, Rocky View County

and the M.D. of Foothills.

CREB has also identified various areas

outside of these boundaries that are

active areas within the region. Previously,

CREB Total included all data from

the membership regardless of location.

Yet, this failed to take into account

transactions that either occurred outside

of the region, or in communities where

CREB members do not represent the

majority of the market transactions. The

new CREB Economic Region will consist

of all member transactions in Calgary,

Airdrie, Rocky View County (includes all

rural, town, hamlet, village activity), M.D.

of Foothills and other active areas. (The

active areas include Strathmore, Vulcan,

Carstairs, Didsbury, Cremona). CREB

will also include a measure for Calgary

CMA, which will enable a comparison to

data from Statistics Canada. The Calgary

CMA includes Calgary, Rocky View

Country and Airdrie.

All data has been revised historically.



28/28

CREB is a professional body of more than 5,000 licensed brokers and registered associates,

representing 290 member offices. CREB is dedicated to enhancing the value, integrity and

expertise of its REALTOR members.

We are committed to equipping our members with the right tools, services and education to

achieve professional excellence and, in turn, enabling REALTORS to offer the best possible

service to their clients.

Our REALTORS are committed to a high standard of professional conduct, ongoing education,

and a strict Code of Ethics and standards of business practice. Using the services of a professional

REALTOR can help consumers take full advantage of real estate opportunities, while reducingtheir risks when buying or selling real estate.

CREB operates and maintains the Multiple Listing Service (MLS) System for Calgary and the

surrounding area. Through the MLS System, members and, in turn, their clients have immediate

access to the latest information on properties listed for sale. Through the MLS System,

REALTORS can provide the buying and selling public with the broadest possible market

exposure and the most complete and up-to-date market information.

Copyright 2015 CREB. All rights reserved. CREB grants reasonable rights of use of this

publications content solely for personal, corporate or public policy research, and educational

purposes. This permission consists of the right to use the content for general reference purposes

in written analyses and in the reporting of results, conclusions and forecasts, including the

citation of limited amounts of supporting data extracted from this publication. Reasonable and

limited rights of use are also permitted in commercial publications subject to the above criteria,

and CREBs right to request that such use be discontinued for any reason.

Any use of the publications content must include the source of the information, including

statistical data, acknowledged as follows: CREB 2015 Economic Outlook and Calgary

Regional Housing Market Forecast.

300 Manning Road NE

Calgary, Alberta

T2E 8K4, Canada

Phone: 403-263-0530

Fax: 403-218-3688

Email: [email protected]

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2015 creb forecast report

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